earnings reports

Drinks giant Diageo posts hefty drop in annual profits

Agence France-Presse, Agence France-Presse
Drinks giant Diageo posts hefty drop in annual profits

Image from Diageo website

Diageo, whose brands include Johnnie Walker and Smirnoff, says profit after tax slid to £1.4 billion ($1.8 billion) for the July 2019-June 2020 period

British drinks group Diageo, the maker of Guinness stout and Smirnoff vodka, on Tuesday, August 4, said fallout from the coronavirus pandemic cut its annual profits by more than half.

Diageo, which also produces Baileys liqueur and Johnnie Walker whisky, said profit after tax slid to £1.4 billion ($1.8 billion, 1.5 billion euros) in the 12 months to June 30.

That compared with net profit of £3.16 billion one year earlier.

“After good, consistent performance in the 1st half…the outbreak of COVID-19 presented significant challenges for our business, impacting the full-year performance,” chief executive Ivan Menezes said in the earnings statement.

Diageo was the biggest faller on London’s FTSE 100 index in morning trade, with its share price down 5.5% at £27.22.

“Sometimes seen as having defensive qualities, alcoholic drinks maker Diageo was nursing a pretty nasty COVID-19-linked hangover this morning as it published a disappointing set of full-year results,” noted AJ Bell investment director Russ Mould.

“People may have enjoyed the distraction of a drink at home amid the difficult times of the last few months but this wasn’t nearly enough to compensate for the hit associated with sales in pubs, restaurants, and bars or at big sporting events or music festivals,” he added.

Annual sales dropped 9% to £11.75 billion.

It meanwhile booked an impairment charge of £1.3 billion – reflecting the impact of COVID-19 and challenging trading conditions in parts of Asia and Africa.

Mirroring other distilleries during the pandemic, Diageo has supplied alcohol to make antibacterial hand sanitizer to boost stocks worldwide. – Rappler.com